Across the Editor’s Desk: Land market on fire
Sizzling heat in the land rental market this winter was almost enough to warm up soils in the northern Corn Belt for planting in January. The emergence of a few public cash rent auctions made the winning auction bids transparent to farmers everywhere.
With land values leaping in recent years, fed by record grain prices, nobody is surprised that cash rents would follow. But the leap in rents to $400 to over $500 per acre for good corn and soybean land left many landowners and operators stunned. For much more on the changes and turmoil in the land rental market see “Looking After Rented Land” on page 12 and “Land Rental Ethics” on page 26.
News of escalating cash rents makes landowners wonder if their rental agreements are keeping up with fair market rates. And farm operators wonder if they can really afford the risk and tight margins of higher rents that similar farms are able to attract.
As usual, farmer opinions vary considerably as I listened in on the discussion on Agriculture.com, the website of Successful Farming magazine. “You will hear complaints about land rents next year as you have in the past,” says kraft-t in a post. “But the results of those recent auctions indicated that the complaints have been unfounded. Those greedy landlords were not overcharging but gave up income potential to the benefit of their tenants. Where are the ‘greedy’ remarks now that we find out that rents have been underpriced?”
Adds Mike M, “I think what has just happened is that those higher cash rent rates have just gone more public. Negotiations have gone from the kitchen table over a cup of coffee to an auditorium in front of your neighbors. Not sure in the long run that is good.”